China Moving To Merge China Eastern, Shanghai Airlines

China Southern Airlines Group Chairman Liu Shaoyong was appointed as the new chairman of China Eastern Airlines parent China Eastern Air Holding Co. Friday, appearing to pave the way for the merger of CEA and Shanghai Airlines.

In an effort to boost Shanghai’s status as an international aviation hub, the State-owned Assets Supervision and Administration Commission of the State Council, CEA’s controlling shareholder, reached agreement with the State-owned Assets Supervision and Administration Commission of the Shanghai Municipal Government, SAL’s controlling shareholder, on the merger of the two Shanghai-based airlines, an industry insider told ATWOnline Friday. Key details on how the combination will move forward remain undecided, but Liu is expected to be chairman of the merged carrier. The government’s plan to revive CEA includes a change in leadership in advance of any consolidation.

CAAC supports domestic consolidation. Among the measures announced last week as part of its effort to bolster the flagging Chinese airline industry (ATWOnline, Dec. 11) was its promise to “support mergers and consolidation” when such combinations would improve management levels and enhance international competitiveness. Beijing also is considering injecting CNY28 billion ($4.08 billion) in both CZ and CEA in addition to the CNY3 billion it already has granted each carrier